How are tariffs and Non-tariffs related to protectionism?
A Protectionism is a policy that is implemented through either direct tariffs or non direct tariffs.
B Tariffs and Non Tariff barriers are ideas. Protectionism is a real thing.
C They are not connected. They are similar but tariffs are mostly for exports.
D They are not really connected, but more like parallel ways in which a government protects the farmers
The correct answer and explanation is:
The correct answer is A. Protectionism is a policy that is implemented through either direct tariffs or non-direct tariffs.
Explanation:
Protectionism refers to a set of government policies aimed at restricting international trade to protect local industries, jobs, or economies. This can be done through various measures, with the two primary types being tariffs and non-tariff barriers.
- Tariffs are taxes or duties placed on imported goods, making them more expensive compared to domestic products. This increases the price of foreign goods, which encourages consumers to buy domestic goods instead. The idea is to shield local industries from foreign competition by making imports less attractive.
- Non-tariff barriers (NTBs) include a wide range of strategies that do not involve direct taxation but still limit trade. Examples include quotas (limiting the amount of goods that can be imported), subsidies for local industries (which make domestic products cheaper), or complex regulations that make it difficult for foreign businesses to operate within a country. These NTBs are often more subtle but equally effective in reducing competition from foreign goods.
Both tariffs and non-tariff barriers serve as tools of protectionism. While tariffs provide a direct financial barrier to foreign goods, NTBs can indirectly limit competition through rules and regulations. Together, these methods are designed to limit imports, favor domestic producers, and maintain economic stability. Protectionism, therefore, is not just about the imposition of tariffs but about creating a favorable environment for local industries to thrive, often at the expense of global trade flows.
In short, tariffs and non-tariff barriers are mechanisms used to achieve the goal of protectionism, which is to protect domestic industries and jobs from foreign competition.